Deposits

Landlord/Tenant Tutorial for Judges in New Mexico

How much may the landlord demand from a tenant for deposit?

A landlord may demand a reasonable deposit from the tenant, which may be used to cover the cost of any damages caused to the premises by the tenant during the term of residency. §47-8-18. If the landlord demands prepaid rent for the last month of the tenancy, such amount is not considered a deposit. §47-8-18(B).

Under an annual rental agreement, if the landlord receives a deposit from the tenant in an amount greater than one month’s rent, the landlord is required to pay the tenant annually interest equal to the passbook interest permitted to savings and loan associations in New Mexico on such deposit. §47-8-18(A)(1).

Under the terms of a rental agreement for less than one year, the owner cannot demand or receive a deposit that is more than the amount of one month’s rent. §47-8-18(A)(2).

What may the owner apply the deposit towards?

After termination of the tenancy, the owner may apply the deposit toward the payment of rent and the amount of damages that the owner has suffered through the tenant’s noncompliance with the rental agreement and/or obligations under the Uniform Owner-Resident Relations Act. The deposit should not be retained to cover normal wear and tear. §47-8-18(C). Normal wear and tear is deterioration that occurs based upon the use for which the rental unit is intended, without negligence, carelessness, accident, abuse or intentional damage of the premises. §47-8-3(J). Uncleanliness is not normal wear and tear. §47-8-3(J).

What are the owner’s obligations in keeping the deposit?

The owner must provide the tenant with an itemized written list of the deductions from the deposit and the balance of the deposit, if any, within thirty days of the date of termination of the rental agreement or the tenant’s departure, whichever is later. §47-8-18(C).

If the owner fails to provide the tenant with such written statement and to refund the balance of the deposit within thirty days of termination, the owner forfeits the right to withhold any portion of the deposit, forfeits the right to assert any counterclaim in any action brought by the tenant to recover the deposit, is liable for the tenant’s court costs and attorneys’ fees, and forfeits the right to assert an independent claim against the tenant for damage to the rental property. §47-8-18(D). An owner who retains a deposit in bad faith is also liable for a $250.00 civil penalty, which is payable to the resident. §47-8-18(E).